Cell Phone Neutrality

"How Apple's iPhone Reshaped the Industry" (Business Week) discusses how the usefulness of cell phones is moving from making calls and sending text messages to running applications. Thus the most important aspect of your phone is shifting from who is your service provider (in the US: AT&T, Verizon, Sprint, etc.) to what platform the phone embodies (such as Palm, BlackBerry, or iPhone). This represents a loss of power for the service providers; they're being disintermediated.

Not so fast (it seems to me). You typically (in the US) buy your cell phone from your service provider, and that phone only works on that provider's network. So although AT&T and Sprint sell virtually identical BlackBerry models (to pick an example), a BlackBerry you buy from AT&T won't work on Sprint's network and vice versa. This is partially a technical issue (CDMA vs. GSM, two different standards for cell phone networks and thus the chip in the phone that wirelessly connects the phone to the network), it's also political: The service provides subsidize the cost of the phone when you sign-up for a long-term service agreement and otherwise don't want you using their phone on another network.

Computers don't work this way. If you want a Dell PC, you don't buy it from AOL (to pick an example) and then have a computer that can only connect to the Internet via AOL. No, you buy a computer from your favorite vendor (Dell, Lenovo, Apple, etc.) and then connect via your favorite ISP (AOL, Earthlink, your hotel's wi-fi network, etc.). Any computer works with any Internet provider. Both groups have to constantly compete to provide the best equipment and service to get you to continue to choose them instead of the competition.

The cell phone industry doesn't have this kind of interchangeability, where any phone will work on any service provider's network. Until that's the case, I'd say we're still pretty locked into our service providers. Google was supposedly working towards a cell phone that works with any carrier (see the Open Handset Alliance, such as "Breaking Wireless Wide Open" (Business Week)), but the Google G1 cell phone only works with T-Mobile (in the US); so much for neutrality.